Horrible idea, the condition of the property turned out to be a bust, took a total loss! 

Ask questions about the property and condition.

Other than: the lease agreementwritten receipt of the deposita copy of the DHCA’s Landlord Tenant Handbookthe condition reportare there any needed forms or locally required disclosures (e.g. lead, radon, etc) at move-in?

You can go ahead and start the eviction process (sending the notice, or whatever you have to do for your state) and tell them if they are out as agreed upon you will cancel it at that point.The cash for keys idea is that you will give them a set amount of cash IF they leave the home in a specified condition by a specific day. 

Thank you for the site recommendation, I will take a look into itIn my search I have found some good properties that are undervalued due to poor conditions in great locations, but these are not house, rather apartments.

The home is a waterfront 2 bed 1 bath, but not currently in livable condition.

---The actual steps should hopefully cost less than $500 to repair - they aren't in bad condition. 

In a market like we've been in where multi-family properties are hot, FHA puts you at a bit of a disadvantage due to the requirement by HUD that the property be in move-in condition.

The extremely damp conditions will infiltrate to the unit/s above and will drastically reduce the useful life of everything in the bsmnt. incl. the water heater, furnace, electrical panel, etc.

Then I would approach the seller about potentially lowering his asking price based on their condition, however if the seller has already stated they are unwilling to replace them, you may find they are also not open to the idea of sharing the cost of replacement.